What Congress giveth, Congress also taketh away. Especially when Congress has a popular piece of legislation to move AND big campaign contributors are concerned. That's the lesson of the IRS reform bill, just signed by President Clinton last week.
Some parts of the law will definitely help average taxpayers. For example, when taxpayers overpay their taxes the IRS will now pay them the same rate of interest that it charges when people underpay. But overall, its tax relief is skewed to the favored top 5 percent of all taxpayers [see OUCH#6]. Here's one example of how the new law will make sure you'll keep paying simply to do your taxes.
Nineteen million people filed their taxes electronically last year. The new law calls on the IRS to try to quadruple that number in the next 10 years. But, instead of directing the agency to produce more and better software free to the public, the legislation specifically carves out a protected arena for private software publishers--telling the agency to coordinate its plans with the private sector. Why? As the Wall Street Journal reported, lobbyists from Intuit Inc. and H&R Block Inc., two top makers of tax-preparation software, "argued the effort would undercut their franchise." (Can you imagine the publishers of all those how-to tax manuals demanding that the IRS stop printing and distributing free tax forms and guides because it took away from their business?)
The bottom line: $39.95 if you purchase Intuit's "Turbotax" program; $19.95 for H&R Block's "TaxCut" software. (Plus the cost of buying a new, updated version of the program every year. And the long-distance charges for calling for help. The IRS doesn't charge for calls to its 800 line--yet.)
H&R Block has been a generous donor in recent years. It gave $58,250 in soft money in the `95-'96 election cycle, split between the Democrats and Republicans, while its PAC and various employees gave another $67,290 to congressional candidates. In the current cycle, the company seems to have sworn off soft money, while its PAC and employees have already made some $32,750 in contributions. Meanwhile, Intuit CEO Scott Cook seems to be one truly turbo-charged donor: In '96 he gave $50,000 to the Democratic National Committee, plus another $1,000 to California Republican Tom Campbell. And in this cycle, as the drafting of the IRS bill heated up in the Senate Finance Committee, he gave $25,000 in soft money to the DNC, $5,000 to Senate Majority Leader Trent Lott's Leadership PAC, plus $2,000 to Republican Senator Al D'Amato and $1,000 to Senate Minority Leader Tom Daschle.
